Pidilite shares surge as the 61-year old company acquires Araldite maker for ₹2,100 crore
adhesivemaker Pidilitehas announced that it has acquired Huntsman Group’s Indian subsidiary for ₹2,100 crore.
- HAMS Group makes brands like Araldite,
AralditeKarpenter, and Araseal in India.
- After the announcement, Pidilite shares jumped by over 4% as of 10.40 am.
The acquisition announcement led to a surge in the Indian adhesive giant Pidilite’s shares, which saw an over 4% rally as of 10.40 am.
What does Pidilite gain?
With the acquisition, Pidilite will also get a trademark license to sell Araldite in the Middle East, Africa, and ASEAN countries. The company said that Huntsman would receive as much as 90% of the cash consideration while the balance 10% will be under an earnout within 18 months if the business achieves sales revenue in-line with 2019. In 2019, the company had posted a revenue of ₹400 crore.
“With this acquisition, Araldite will add to the already very strong portfolio of Pidilite’s adhesive and sealant brands and will complement our retail portfolio. We are confident that this acquisition will create significant shareholder value through strong revenue and cost synergies,” said Bharat Puri, Managing Director, Pidilite Industries in a statement.
While Pidilite is yet to announce its second-quarter results, for the first three months of the current financial year, Pidilite had posted a profit of ₹15.82 crore, a massive fall from its profits of ₹294.39 crore in Q1FY20. Its revenue was also down by 56% year-on-year to ₹897.4 crore.
However, its minuscule profit was better than what analysts had expected – a complete washout.
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